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Public Sector for Public Interest

PSUs can once again be the beacon that will show the way to development, growth and social benefit

LPG is widely seen as the magic potion that gave India’s economy a phenomenal boost. Liberalisationprivatisation-globalisation, or LPG, was welcomed by many as the recipe that not only injected new energy into the slowgrowing Indian economic plant, but one that would also be the death knell of the public sector parasites that were inhibiting its development. Some did die, some are on oxygen, and a few have seen rebirth in a privatised avatar. Many, though, are yet alive. It is in this context — as the new, LPG India turns 21 — that the role of the PSU merits discussion.

Born out of a planned-economy model, underpinned by a Nehruvian-Fabian socialist philosophy, PSUs were conceived as torchbearers of a resurgent India. The economic rationale was that the private sector was unlikely to invest in large, capital-intensive, longgestation projects with slow returns or high risks. PSUs were, therefore, set up for steel plants, oil refineries, aircraft manufacture, heavy machinery and such-like; over time, they got into a range of other fields too. PSUs were also intended to secure the ‘commanding heights’ of the economy, so as to guard against any monopoly, cartelisation or market manipulation by the private sector.

Now that the private sector is able to raise substantial funds, aided by the fact that foreign investment is permitted in most sectors, what — if any — is the raison d’être for the public sector? The surprising efficiency of PSUs, given the constraints and interference that they have to live with, is generally not recognised, even as the whole government sector has been vilified as being inefficient, slothful and corrupt.

With this background and in new economic scenario, the role of PSUs has obviously to be very different from the days of monopoly. Today, they must act — where they can — as market shapers and influencers. PSUs in hi-tech areas must be leaders in R&D, and invest in long-gestation developmental programmes. Some of the country’s best talent — especially in the engineering domain — is in the PSUs; also, with the exception of the pharmaceuticals sector, the quantity and quality of their R&D is far ahead of that in the private sector. PSUs must leverage this.

Unlike private sector companies, they do not have to worry as much about the day-to-day reactions of the stock market, nor be driven by the QSQT, or quarter sequarter tak, mentality of their private-sector peers. The relative independence from these pressures means that they can afford to focus on the long term. PSUs should be leaders in environmental issues: conserving energy, water and resources in their processes; recycling waste and water; minimising their carbon footprint and promoting environmental consciousness amongst employees, suppliers and the community.

PSUs should set benchmarks for customer service, transparency, corporate governance and ethics. In sectors where they have a substantial presence, PSUs can ensure that no cartelisation or exploitation of customers takes place, especially when there are demandsupply mismatches. The airline industry is an example of such trends, and it is disturbing that some time back, there were market rumours of Air India too colluding with private operators to capitalise on temporary seat shortages. PSUs are commercial undertakings, but the very fact of their being ‘public’ implies a larger social responsibility. As many instances around the world have shown, public good and commercial viability are not always in conflict. As a matter of fact, the flavour of the day is doing well by doing good.

The roles and responsibilities of PSUs require appropriate managerial frameworks, and these will be impossible without a major revamp of the overall governance paradigm of PSUs. Reform at the board level is the first requirement. PSUs must become truly board-managed organisations, with the government stepping back and giving full power to boards. At most, the government could retain a say in very large investments entailing debt or raising of new capital, and any fundamental changes in the stated objectives of the PSU. Like any promoter in a private company, the government can nominate board members, but — like listed companies — it must have independent directors and these must be selected by the board, through its nominations committee, rather than nominated by government. Also, it must be the board — and not the government — that selects and appoints the CEO. The board and professional managers must run the PSU, not the owner or promoter.

One vital lesson of the last half-century is that interference by politicians and bureaucrats is the touch of death for a PSU; this must end. Apart from this, a few simple reforms at the level of the board are all that are required to begin a transformation of PSUs. This, though, is possible only if there is a change in the mindset of the government. It must recognise that building and strengthening autonomous institutions is a necessary element for a smoothly-functioning society, and a vital part of the economic infrastructure.

It is on this premise that institutions were built in the early years of the Republic. Those that were given — and guarded — autonomy, continue to do well (a few educational institutions, sci-tech organisations, the Election Commission); others that began well have been destroyed through interference. Sadly, many PSUs, such as Air India and BSNL, are in the latter category. In the new, competitive context with dominant private players threatening to dictate terms in many areas, PSUs are needed more than ever. It is time to reinvigorate them and use them as guardians of public interest and engines of development and economic growth.

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Dollars, Dissent and Democracy

The government has problems with foreign-funded NGOs, but is comfortable with corporate lobbying.

Do dollars dictate dissent? Are agendas altered as advised? Government statements related to these questions — specifically, the foreign funding of non-government organisations (NGOs) involved in the protests against nuclear power at Kudankulam — generated much discussion. The uproar is over, and Kudankulam will soon be operational. However, many wider issues remain, and these merit consideration. Among these, two significant ones are the role of NGOs — or, more specifically, civil society organisations (CSOs) — and the foreign funding of these. As a consequence of globalisation, international CSOs or NGOs are now common and play an important role, particularly in areas like environment and human rights. Also, large foundations do drive agendas, for example, the thrust on HIV/AIDS a few years ago. While some may be out of sync with local needs, others may add strength to local requirements. These are consequences of globalisation that we have to live with. In all cases, though, differing viewpoints help debate, which is the essence of real democracy.

Foreign funding of NGOs is circumscribed by many laws and restrictions, with the draconian FCRA imposing severe constraints. Similar funding for companies is far simpler; in many sectors, even 100% foreign ownership is permitted. The government implicitly discourages foreign funding to NGOs, but it seeks overseas investment for the corporate sector, including in sensitive areas like defence production, telecom and media.

Foreign-funded NGOs are prohibited from undertaking ‘political activity’. This, presumably, includes picketing or demonstrations on such things as reservation for women in Parliament. But there is no such restraint on companies. The latter are free to engage in policy advocacy and almost all of them do so, often through senior executives stationed in Delhi just for this. The government seems to have overcome its aversion to the ‘foreign hand’ with regard to the corporate world, but evokes it — with underlying anti-national connotations — in the case of NGOs. 
It is strange that while the development sector, represented by NGOs, has difficulty in accessing policymakers, commercial or market forces have no such problem.

Not only are they free to actively engage in policy advocacy, but they have direct reach to the very top echelons of government, with visiting foreign CEOs getting a ready audience with even the Prime Minister. Thus, the government saw no wrong when foreign companies, and even a foreign government, campaigned against the nuclear liability Bill, or when they tried to mobilise support from Indian industry associations and media. But when NGOs campaigned with regard to nuclear safety at Kudankulam, the government saw red. Apart from arresting activists in Kudankulam and Ratnagiri, it highlighted foreign funding of the NGOs as an issue. According to media reports, the offices of an NGO have been ‘raided’ apparently in connection with a . 4-lakh foreign grant received some years ago.

The pros and cons of nuclear power are best left to another piece and time. The issue here is with regard to foreign funding and the stifling of dissent, including through such coercive means as use of enforcement agencies. The government provides almost unlimited leeway to commercial interests — without differentiating Indian ones from those funded through foreign money — to participate in and influence the policy scenario in any area. As long as this is done without bribery or corruption, it is a positive sign of a vibrant, largely free-market economy. With almost free flow of capital, partial convertibility of currency and diffused global ownership of listed companies, the participation of foreign companies in this debate is both inevitable and desirable.

This openness to policy advocacy and mobilisation of support by the commercial sector, though, needs to be matched by an equal welcome to advocacy and mobilisation by civil society too. Foreign funding is hardly the issue: if anything, NGOs that have to necessarily depend on grassroots constituencies and support are less prone to be influenced by foreign forces than companies. As for the bogey of terrorist financing: first, money for this need not necessarily come from abroad; second, foreign funds can be sent through hawala channels; and third, within the regulations, it is easier to route money through a company rather than an NGO. 
It is an accepted role of all CSOs to empower people, promote and protect their rights. In doing so, and in challenging the status quo, even those involved in grassroots work in safe fields like education or health, often find themselves at odds with the administration.

Policy advocacy in any field pits NGOs against existing policies. Yet, the attitude of any progressive government, certainly one that professes inclusion and empowerment, must be favourable towards such advocacy and work. 
Dissent must be debated, not crushed. Not all NGOs are angels, but good ones can help to promote and monitor delivery of essential services and goods at the grassroots level, and provide genuine feedback. 
A government keen on this should see NGOs not as enemies, but as potential partners who can be proponents of alternative approaches and policies. Certainly, attempts to involve NGOs in the formulation of the 12th Plan and through the NAC were indicative of positive thinking. Recent pronouncements and actions indicate a reversal. This reversal bodes ill for an equitable, democratic and open society. 
Call for a course correction, captain.

 

Knowledge Hubs for Tomorrow

Create education clusters that promote innovation and application to raise our scholastic standards

The importance of education is continually emphasised in public discourse. We hear — and mouth — endless repetitions about India as a knowledge power, of how education will empower and will help us to magnify the demographic dividend.

In this context, recent news items are like a slap in the face: hopefully, a wake-up call to all those concerned. First, there was the report of India being ranked 73 out of 74 countries on the basis of a global survey (PISA) of the educational capabilities of students of class V in maths, science and reading. Second, the poor academic standard of our school students was re-emphasised in the findings of the independent yearly study (ASER) done by Pratham.

Then, at the university level, our standing — based on the rankings by standard global surveys — continues to be dismal, with but a few stray institutions finding their way into the top 100 (or even 500). Finally, in a recent survey of think tanks, so crucial in the formulation of public policies and in conducting research studies, there is but one Indian organisation in the global top 50.

There are many valid questions regarding the criteria that determine these rankings. Some may even infer bias. Yet, few will deny that there is a great degree of truth regarding the poor quality of our education and research system, at least in relative terms. Other indices related to patents and publications in respected journals point to the same conclusion.

It is time for new thinking and quick action. Much needs to be done in schools; that is not discussed here. On higher education, supporting and improving existing institutions is an obvious necessity. However, more than doubling the present number of students (to reach the target of 30% GER) will require vast expansion of infrastructure. This presents an opportunity to take new initiatives that enable growth while simultaneously meeting other objectives like quality, excellence, research and innovation.

One such initiative, long suggested but yet to happen, is the creation of designated areas where a vibrant educational ecosystem can take root. These learning, education and research nodes (LEARN) would be centres that promote learning, innovation and application. The learning institutions will be of varied disciplines as innovation flowers best when there is interaction between, and at the intersection of, different disciplines. Research centres or labs will be next door and there will be a strong industry or user interface. The last will ensure translation of research into concrete applications, the scaling of these and — where appropriate — their ‘monetisation’ for money or social gain.

Institutions selected to operate in these areas should be given far greater freedom than what is presently constrained by the stifling regulatory framework of UGC, AICTE and other bodies. Specifically, there is need for autonomy in selecting curriculum and courses; qualifications, recruitment and terms and conditions (including compensation) for faculty and staff; and the method of selection of students. On the last, there could be stipulations regarding a clearly defined, publicly announced and transparent process, with 20% of the students getting full waiver of all fees and hostel charges.

LEARNs will provide land for selected schools. In these schools, preference in admissions will be given to the children of faculty members and professionals from institutions in the zone. This is an important factor for attracting and retaining key faculty and top-notch professionals.

R&D institutions — both governmental and corporate — will be incentivised to be in the LEARNs. In some cases, existing R&D facilities will serve as the nucleus; in others, existing institutions may serve as the nucleus. Industries linked to the core discipline of the R&D institution will be encouraged to set up facilities in the zone, facilitating interaction amongst industry, R&D and academia.

Thus, one is looking at a cluster or agglomeration of universities, research labs or national research institutions, incubation facilities, start-up and established companies. Imagine a cluster that has institutions like Tata Institute of Social Sciences, an IIT, an IIM, a large multi-disciplinary central university with emphasis on the humanities and creative arts, large national research institutes like the CSIR labs, an incubation centre with start-up companies and some established industries. This will serve to kick-start innovation by creating a conducive ecosystem. Other ingredients like angel or venture funding, mentoring and networking will also be needed to ensure that ideas and innovation are translated to marketable products or services. In Silicon Valley, for example, such ecosystems have evolved and grown organically. The challenge is to create this through active intervention. If successful, this will give rise to high-quality educational institutions and stimulate innovations that are market- and need-based.

Such a model provides a broad framework which can be adapted for different contexts. It does not prescribe the discipline, organisational form or focus of educational institutions or R&D facilities; nor does it pick any specific industry sector for incentives. Thus, it respects and benefits from India’s diversity.

There would be many questions and sceptics for any such idea, and opposition on many grounds. A practical way around much of this would be to begin this as a pilot project, limited to three or four locations, and expand while learning from this experience. The dire educational and research scenario needs prompt and bold action: LEARNs are one of the possible ways forward; we need many more.

The Past as Farce

At the end of a hard, divisive 2011, a quirky look at the year that wasn’t, but just might have been

As in all new beginnings, the start of a new year is a time to look forward with hope, in anticipation of a better tomorrow. It is also a time to look back at the year gone by and to take stock of successes and failures, triumphs and tragedies. Many would consider 2011 a sad year for India. Beginning with the country riding high, following a sustained burst of high growth that defied the fears of a slump after the US crisis in 2008, the year ended with deep economic woes, a parliamentary logjam and India’s image taking a considerable beating.

Critics bemoaned the lack of strong leadership, a governance deficit, policy paralysis, corruption and cronyism. Most fire was directed at the government, though some companies and their top executives are also in the dock for corruption. Civil society too, fighting for probity in government, has not always been beyond reproach.

Even the year-end festive merriment failed to lift the gloom of high inflation and low growth; a ‘fast’ movement and a slow government; large outlays and small achievements. To help dispel despair, so inappropriate at the inception of a fresh and unsullied year, we look back here at 2011 in a lighter vein. CPM continued to be the most popular and crucial factor for the country. Lest rightthinking compatriots (and much of corporate India) throw a fit and quote ancient scriptures to prove that the left is never right, and before big brother and elder sister threaten mass agitations, let it be clarified that the acronym mentioned is not their bête noire, but refers to cricket, politics and movies. Despite the Commonwealth Games and the whitewash in England, cricket continues to be the dominant sport in India. While the ever-larger moral police squad and the nanny government rant against dirty pictures on the Internet, Dirty Picture on the big screen draws even bigger crowds: emphasising, once again, the centrality of movies in the mind-space of Indians. As for politics, it is to India what weather is to the British: fickle, unpredictable, all-pervasive, and a topic of conversation even amongst strangers.

The food security law, touted as version 2 of NREGA in terms of being an electionwinner for UPA-II, polarised views. Some see it as another crucial element in the social security net, a welcome antipoverty measure; others view it as one more leakageprone populist and profligate measure that the country can ill-afford. Many worried about the adequacy of government stocks of grain to meet the commitment. They overlooked the brilliant strategic thinking of government, whose subtle moves led Anna to go on an indefinite fast. With many threatening to join him, the consequent drop in grain consumption could have helped to build buffer stocks for the food security scheme. Furthermore, the mass fast would have quickly brought down worrisome inflation in food prices. On the other hand, calling off the fast meant a political victory for government: a truly Machiavellian manoeuvre that ensured a heads-Iwin-tails-you-lose situation. Clearly, the government — pilloried for being incompetent and stupid in its handling of the Anna movement — deserves credit.

Anna and Lokpal were the staple diet of the year for media. Every flutter of the flag at Ramlila Maidan was covered, analysed and deconstructed by experts on each TV channel. The verbosity and volume of voices from TV studios was such that one could probably hear them in all of Delhi without the aid of TV transmissions — a new form of direct-to-home. The anchors may not always have been models of objectivity, but they were certainly leagues ahead of MPs in the art of interrupting and sheer lung power to outshout others. In terms of headlinegrabbing sensational statements, though, they were considerably behind the head of a media body.

In Delhi, everyone is ji (including Uncleji and Auntyji); thanks to 2G, the most popular new ji is CAG. Some are unhappy with his astronomical imputed-loss figure of . 1,76,000 crore (roughly 2 followed by a dozen zeroes). Just wait till he calculates other imputed losses caused by government policies. For example, the loss due to government’s education policy: if seats in IIMs, IITs and other such premier institutions were auctioned, tens of thousands of crores could have been collected over the last 50 years. After all, if Harvard charges well over $100,000 for an MBA seat, surely the IIMs too can fetch as much. All computations for past seats will, of course, be done at today’s rates.

Meanwhile, the judicial system has found its own solution to the continuous barbs about justice delayed being justice denied. It has hit on the idea of jail first, trial later — after all, like presumptive loss, there can be presumptive guilt.

Some see 2011 as a year of wasted opportunity, with brand India losing a lot of its sheen. Yet, we Indians are given to meanderings, interrupting our journeys to savour roadside distractions. Like traffic on our streets, or Brownian motion of particles, there is chaos at the micro level, but a steady onward flow at the macro level. Anyway, if the world is ending in 2012 — as prophesied by some — then why hurry? And, if it is not, then what’s the rush? To ensure good spirits all around, the government announced a cut in the import duty on alcohol at the end of the year. A crucial session in the Rajya Sabha helped to take the focus off another lost opportunity in Melbourne. But then, tomorrow is another day. RIP, 2011; welcome 2012.

Great Expectations

Services, rather than manufacturing, are likely to offer India the jobs it needs

“ Aman’s reach should exceed his grasp, or what’s a heaven for?” The National Manufacturing Policy (NMP) and its lofty ambitions seem to have taken Robert Browning’s lines to heart. The policy’s objective is to boost manufacturing output so that it is 25% of GDP by 2022, and creating 100 million additional jobs in the next 10 years. Scepticism may well be in order.

Numerous constraints inhibit manufacturing, and while some of them may be minimised — even overcome — the possibility of achieving a compound average growth rate of over 12% is, indeed, dim, and the 100 million jobs seem like a pie in the sky. Increasing productivity, new production techniques and greater automation are all contributing to a reduction in the labour-intensity of manufacturing. Productivity, for example, was growing at over 7% a few years ago, against 4% a decade ago. It would, by now, be higher. Little wonder then that in Gujarat, the state favoured by most industry honchos, organised employment grew by a measly 0.5% a year from 1995 to 2008, though the state domestic product grew at a brisk 8% annually.

In today’s world of freer global trade, India in unlikely to be competitive in the massmanufacture of standardised low-value products. Despite the proposed National Manufacturing Investment Zones — which would, presumably, have first-rate infrastructure and logistics — countries with more efficient systems, better infrastructure and low costs (China, for example) will dominate this segment. Also, lower-value and standardised manufacturing, which create mass-scale employment today, is getting increasingly automated. Even in industries like automobiles or steel, which have seen rapid growth in India over the last few years, employment growth has been only marginal. More importantly, in all industries, the automation typically takes place from the lowest levels. Therefore, even as manufacturing grows, there is unlikely to be much demand for unskilled and semi-skilled labour. Since the competitiveness of such manufacturing is based mainly on wage arbitrage, companies and industries tend to continuously migrate to ever-lower wage locations, as their suitability improves. Thus, banking on low-value mass-manufacturing as a source for job creation is fraught with risks, because of both automation and migration to lower-wage foreign destinations.

India’s real advantage lies in manufacturing products that leverage its abundance of engineering and science talent, and IT software capabilities. Such products are typically high-value and, compete on the basis of parameters like quality, design and innovation, rather than merely on cost. Infrastructure efficiencies are, therefore, less important. These hitech, high-value products, however, do not typically generally large employment. Let us not count on manufacturing to create the jobs we need. Services, on the other hand, are less prone to automation. The rapid growth in India’s service sector has been matched by growth in employment. While an overwhelming majority of all employment in India is in the unorganised segment, it is noteworthy that the singlelargest employer in the organised private sector is an IT services company. The phenomenal growth of India’s IT software and services sector has led to unprecedented growth in job opportunities. While the direct employment is over 2 million, the indirect jobs created are estimated to be 3-4 times this number. A majority of these support and spin-off jobs employ persons who are not graduates; in fact, many have not gone beyond the school-level.

It seems clear that the services sector is, potentially, the most dependable source for mass employment in India, on the scale required and to sustain the millions of semi-skilled villagers who can no longer be gainfully employed in agriculture. Unfortunately, present policies — and their implementation — do not encourage the growth of the services industry. The full potential of IT software and services, for example, is stymied by myopic and excessively aggressive stance of tax authorities, focused on short-term revenue maximisation. Policies like the SEZ scheme are of little use to the services sector.

It is not a question of manufacturing versus services: India needs to grow vigorously in both. Manufacturing needs to focus on key areas like strategic sectors: aerospace, nuclear, defence; IT, communications and electronics (else, imports of equipment in this sector alone will exceed our oil and gas imports in but a few years); and areas of comparative advantage, like pharmaceuticals and automobiles. However, as far as job creation is concerned, the emphasis must be on services. This will create far more employment, in a dispersed, decentralised manner, and for semi-skilled and unskilled people. It will, thereby, ensure growth that is more equitable and sustainable. However, this requires vision, backed by appropriate initiatives and action.

Ultimately, India needs a large, vibrant, value-creating manufacturing sector that is knowledge-based rather than wage-arbitrage driven. Equally important, it requires a much larger employment-creating services sector, which spans the value chain from low-end localised services, to the most sophisticated globally-competitive, intellectual property-based services. For this to happen, the manufacturing policy needs to be complemented by a services policy.

CSOs and Caesar’s Wife

The villains of the piece, with regard to corruption, have long been politicians and administrators, including the police. Newspapers revel in exposes about corrupt leaders and babus; TV channels enjoy playing prosecutor (and, often, judge); and movies have the mandatory corrupt politician in their plot. It is only recently that bribe-givers, particularly business organizations, are also in the limelight. High profile cases connected with mining and telecom have brought to the fore the active role of corporates, and whispers in the market-place have now become headlines in the media. Earlier, a financial fraud of massive proportions sent tremors through the corporate world, triggering many a discussion and report about corporate governance and ethics.

Issues related to corruption and fraud by the private sector have now turned the spotlight on governance in companies and led to new regulations, including strict norms – especially for companies listed on the stock exchanges – regarding Board composition, disclosures and transparency. Also, Ministry of Corporate Affairs has published voluntary guidelines, which raise the bar beyond what the law mandates. A new Companies Act is in the final stages of clearance and enactment; it seeks to strengthen various aspects of corporate governance. There is a lively debate about whether PPP projects should also be under the ambit of right to information. In fact, some would like the private sector too covered under RTI. All in all, there is much focus and regulatory activism aimed at enhancing accountability, transparency and honesty amongst companies.

At the same time, a Lok Pal will – almost certainly, one expects – come into existence in the near future, and will act on corruption in the government. A similar law is likely to ensure that the judiciary too is covered. These are welcome developments: while they are unlikely to end corruption, these could certainly help to curb it.

Apart from business, judiciary and government, there is now an increasingly important role being played by two other segments: media, and civil society. The former wields disproportionate power, because of its ability to set agendas, steer discussion and influence opinion. As in other sectors, there are those who are corrupt and others who are honest. The ills range from paid news and insider trading, to outright extortion and blackmail. Self-regulatory mechanisms are in place and seem to be making some impact; also, private media is subject to the same laws and voluntary guidelines as corporates in other sectors.

Civil society organizations (CSOs), in contrast to the segments mentioned earlier, have far less regulation. They are, of course, under the ambit of the Societies Act (or its equivalents, depending on their organizational form) and constrained by other applicable laws (e.g., on foreign donations). However, they are rarely – if ever – under the public scanner or in the media glare. As a result, one hears little about any corruption, fraud or malpractice amongst CSOs. While one explanation could be their innate honesty, few would attribute it to this. As in other fields, here too there are honest organizations run by selfless persons, and others who are there only to make money or seek undeserved fame by any means.

A recent high-profile case has highlighted ethical – if not legal – issues related to the operation and management of CSOs. Other attempts – many by motivated detractors – to defame CSOs or individuals connected with them, have raised doubts about their quality of governance. The laws relating to Societies and Trusts (under which most CSOs operate) are often archaic, with periodic tinkering making them generally worse. “Light touch” regulation is appropriate for this area; however, there is a need for safeguards, checks and balances, and transparency. At the same time, governmental control in any form is contrary to the very purpose of such organizations, and regulations like the new apparently draconian ones in Gujarat, are definitely undesirable.

One cause for the clouds of suspicion is that this new growth sector has attracted many people out to make a quick buck. The dedicated, do-good, stereotyped “jholawala” –  surviving on a pittance and commitment to a cause – yet exists, but has now been joined by those for whom CSOs are only a convenient mechanism to tap funds (mainly from government), and by socialites who are in CSOs for visibility or as an excuse for kitty parties. Some CSOs are but proxy marketing and public relations arms of the corporate that funds them, often with undeclared connections; others are used as a tool against corporate rivals; some are also being used as fronts by companies, political parties, and religious organizations. here are many that have become very important pillars of our democracy and do outstanding work. While some have excellent governance with well-defined procedures and systems, numerous CSOs have poor accounting practices and petty frauds are not uncommon. Unlike corporate Boards, there is no requirement for independent Directors, and few CSOs have the equivalent of an Audit Committee.

Clearly, there is need for some minimum standards of governance, especially since CSOs get substantial funding from the government, and many raise resources from the public. Therefore, mechanisms to ensure good governance and transparency, while safeguarding against financial improprieties and frauds, are necessary. Ideally, CSOs would themselves come up with a self-regulatory code, taking forward efforts like the Credibility Alliance. It is time for genuine CSOs to stimulate a debate on ethics, good governance and ways of enforcing standards of transparency and probity in this sector. To sustain credibility, CSOs – and their founders – must, like Caesar’s wife, be above suspicion.

Science as the Foreign Jamaai

India’s policy establishment neglects basic science and technology at its own peril

Science and scientists are now like the foreign jamaai in the traditional Indian household: treated well and showcased to outsiders, but never really integrated into the larger family. Immediately after Independence, Nehru provided a great thrust to science, with rationalism or the ‘scientific temper’, a key pillar of the new India which he sought to create. He accorded scientists special respect, and many of them had direct and unhindered access to him. Subsequent prime ministers — particularly Indira Gandhi — continued this tradition till the 1990s.

Over the last two decades, India’s achievements in space and nuclear technology have won much acclaim, and its phenomenal success in IT has led to its global recognition, however exaggerated, as a technological powerhouse. Today, the world has become dependent on technology, which increasingly drives the global economy. India itself is transitioning into a knowledge economy. Despite this, the government seems to be less enthusiastic, and its commitment to S&T appears lukewarm. One indication is the proportion of the country’s GDP spent on S&T. Two decades ago, it was decided that this should be at least 2%; today, it stagnates as it has for years, at under 1%.

Scientists no longer have the privileged position that they enjoyed in the past, and the bureaucracy often calls the shots in many matters related to science. Politicians talk about the importance of science, but increasingly this seems like mere lip service. Even as the S&T establishment has grown in size, its relative importance has shrunk. This is analogous to the position of India in global science: absolute growth, but relative decline. Some countries like China and South Korea have hugely raised their share in global science publication, while India has fallen far behind.

India is considered the world capital for frugal engineering with examples like low-cost refrigerators, medical equipment and cars. However, the under-pinning of basic science to support these technological and design innovations is weak and getting weaker.

This is why many looked at the Twelfth Five-Year Plan with great anticipation. One hoped that it would impart a new impetus to science and integrate S&T into core areas of development. Just about a year ago, the Scientific Advisory Council to the Prime Minister brought out a vision document outlining steps to make India a global leader in science, emphasising the vital role of S&T in the context of India’s developmental goals.

The expectation was that this exercise would be taken further, in a concrete manner, in the years ahead. In this context, the Planning Commission’s approach paper to the Plan is a disappointment. S&T could well have been the central core of the 2th Plan, instead of an addon. While a separate chapter on innovation is a welcome step, it has practically no linkage with the one on S&T. In the education chapter, there is next to nothing on enhancing research in universities, or the need for a huge increase in the number of high-quality doctorates in S&T, or the acute shortage of faculty in science and engineering. While the approach to innovation is fairly comprehensive, education and S&T are in silos, reflective of the actual position.

Science is global, but the S&T chapter does not place Indian science in the global context. It notes, again, the need to raise R&D expenditure to 2% of the GDP from the present 0.9%; but of the incremental 1%, it wants private R&D to contribute three-fourths. Apart from the impracticality of expecting such a large increase in private sector R&D, this raises doubts about the government’s own commitment to R&D.

Since private R&D is likely to be concentrated at the delivery end of the research-development-engineering chain, science will again get a short shrift. Socalled ‘small science,’ done typically in the universities, gets no mention, though it is this, around the world, which is the foundation of bigger science and of technology. This is also, typically, the breeding ground for innovation and breakthrough technologies. There is no mention of the policy regarding technological self-reliance in strategic sectors: has this goal been abandoned? The growing strategic importance of electronics, high-performance computing and communication needs recognition. The need to liberate S&T institutions from the stranglehold of bureaucratic procedures — including those affecting recruitment and investments — and to give greater freedom and autonomy to research institutions is downplayed. Bureaucracy is one reason why Indian scientists do so well abroad, but not in India.

The S&T chapter in the approach paper misses many key areas. It could have broken new ground and identified more specific policy directions, especially with regard to energising science research in universities, redefining the role of government R&D establishments and integrating S&T into mainstream development efforts. The needs of mission-oriented efforts, say, in strategic sectors, industryled R&D, and basic science are quite distinct, and need different approaches.

Indian industry has a dismal record of R&D; but market compulsions are changing that, and some fiscal incentives can stimulate investments. Government commitment, though, seems to be trending in the opposite direction. There is need to recognise that development, economic growth and geopolitical power are dependent on S&T capabilities; the government must, therefore, invest far more in S&T, and completely overhaul the machinery of managing science.